According to a Reuters report, Bank Hart America's chief investment strategist Michael Hartnett warned in a weekly summary that the US economy could collapse as a result of what he called an "inflation shock" and a "rate shock."
Last week, the Federal Reserve signaled that it was likely to cut assets from its balance sheet, which is inflated to nearly $ 9 trillion, at twice the rate of the previous "quantitative tightening". In addition, according to the March FOMC minutes, most commission members want the central bank to raise its key interest rate by 50 basis points, as part of a plan to reduce high inflation.
This is despite the fact that Jeremy Powell emphasized that "the US economy is very strong and well prepared to handle tighter monetary policy". He noted that "the return of inflation to their goal of price stability is likely to take longer than previously expected". Despite these assurances, Michael still expects the recession to develop and predicts an increase in the unemployment rate by 1.5%. To this, it will be added the already inverted ten-year yield, which historically preceded every American recession.
However, Michael argues that in the context of these economic shocks, cash, commodities and cryptocurrencies, which are considered inflation-resistant and ultimately outperform bonds and stocks, are likely to emerge. After Bank of America ignored the cryptocurrency for a long time, it set up a cryptocurrency research team in the summer of 2021, and in July 2021 the bank also launched a bitcoin futures trading service for some of its clients. In January digital assets report , the bank described bitcoin as "important", saying the cryptographic industry was "too big to be ignored".